I was talking to one of my colleagues a few days ago about some of the issues he’s having helping his customers make the scary transition to a more adaptable organisational style based on business capabilities and service-orientation. I thought I would briefly capture some of the questions and my feelings on the answers.
1 Looking for a clear start position (“where do we start to eat the elephant”)
I firmly believe that structural changes driven by increasing interconnection across organisations require organisations to atomise – essentially break into their component parts and then specialise in those that will enable them to excel whilst offloading other capabilities onto partners. Business capability modelling allows us to set the scene for this transition by considering an organisation in terms of what it does and then placing commitments and metrics around these capabilities. Considering business capabilities therefore allows us to understand the shape of an organisation in terms of what it does and then ask questions about the performance of those capabilities in the here and now. This gives us an excellent start point since any initial capability-based view of the organisation is likely to highlight many misalignments and performance issues based on that particular organisations journey to it’s current state; surfacing these issues with some well crafted value questions can really help us to pick a good area to begin the transition whilst simultaneously giving us the strategic backdrop to prepare for atomisation. Anybody looking to take this journey – and this should really be everybody – should adopt a philosophy of “get the (broad) big picture, identify and prioritise improvements, start small, deliver incremental value and then broaden the scope”. A recent presentation I saw (somewhere – sorry lost the reference) on SOA adoption from a US government agency said “think big, start small, fail, fail, fail, succeed, scale rapidly”. I think this would summarise my preferred approach. My particular interest is in how we use industrialisation to reduce risk during the ‘fail, fail, fail’ part of the story. One key way to do this is to look at shared service platforms that take care of the technology end of the issue for you.
2 How do we encourage our staff on this journey (The carrot not the stick)
Business capabilities (particularly when supported by industry metrics from a framework like APQC) give us the ability to set people ‘challenges’ by highlighting the gaps between their performance and external averages. This is not really a carrot or a stick specifically but it’s an important aspect of starting the journey, since focussing pressure onto people within the business through highlighting performance gaps helps to reduce the pressure on us in justifying why they should engage. In many cases the surfacing of metrics that are actually aligned to organisational needs turns the conversation around such that customers are asking us for help to meet their newly minted metrics rather than us trying to sell some notional concepts such as ‘agility’ or ‘cost effectiveness’. All of these may be important aspects of the way we do things but they need a proper context in which to be governed and delivered; essentially we need to shift away from the notion of ‘general’ improvement across everything due to technology (e.g. 10% reduction in applications delivery time) to specific, governable and business focused metrics (e.g. £50 reduction in the cost of widget procurement). Again in this context industrialisation – rather than SOA per se – allows the pitch to be about the greater reliability and lower risk of transitioning to a capability-based approach (and hence aligning their delivery capabilities with their metrics) to improve their performance rather than on trying to sell the abstract notion of SOA.
In the longer term the aim should be to support capability owners in the monetisation of services and thereby give rise to much more innovative compensation schemes based on known, concrete and defensible metrics. It is only through having commitments and rewards properly aligned and – equally importantly – the means of collecting and surfacing the information needed to assess against these metrics – that we truly develop a culturally holistic organisation.
If the question being asked is more about how customers encourage developers to share, however, then the question is at wholly the wrong level; essentially we should be considering how you give capability owners a sufficiently high leverage view that they can make sourcing decisions for themselves. At the end of the day the end state requires that procurement decisions shift focus away from IT and onto capabilities (which will include the IT specific to their implementation). In that context the capability owner is making a decision between buying or building a capability and developers will never be involved until after those decisions have been made (potentially not even then if the capability owner decides to contract the work to an external provider or buy a SaaS proposition).
3 How do we gain traction and momentum (early wins)
One of the key tenets of any successful approach IMHO is that although we take an initial (rapid) view of the breadth of capabilities within the organisation to support ongoing governance, we then quickly zero in on specific projects that deliver attributable, high value improvements. We should always pick sensible early projects based on high impact but low risk, but then have the ability to rapidly scale out based on successes, since successes breed their own momentum. In particular, if we have metricised the capabilities that the organisation has then we’ll potentially have two very favourable conditions: a backlog of performance gaps within the capability map (and thus people looking for help to meet their commitments) and demonstrable early successes in helping other parts of their organisation succeed in this aim. As a result momentum will build organically – and potentially rapidly – if we get the early project decisions right. One of the key benefits of the capability approach as scale builds, however, is that it enables much more parallel working on smaller improvement programmes, since commitments are scoped to providers as a ‘black box’ and thus the amount of cross enterprise coordination is reduced (not eliminated, just reduced).
4 How do we make this sustainable (culturally imbedded)
The key aspect of a sustained change is the realignment of commitments around systematic boundaries (i.e. the capabilities). The use of capabilities and metrics to specify the required outputs enables us to gradually transition behaviours and organisational structures – business capabilities can be ‘logical’ during the early stages of a transition to service-orientation and layered over the top of existing hierarchies. Concentration on required outcomes will tend to gradually shift organisational structures to best realise commitments, however and to maximise specialisation – as structures that do not align well to commitments (or capabilities that try to do too much) will struggle to realise their cost and performance metrics. Equally fundamental to sustainability, however, is the need to ensure that service provision within the enterprise becomes monetisable in order to ensure that capability owners have the scope to:
- Invest in building and extending their services based on their commitments and the needs of their consumers;
- Clearly see the impacts of building instead of sourcing (since it will have to go onto their cost base rather than come from some nebulous central benefactor);
- Can compare the costs of internal capabilities against those from external providers (whether those capabilities that they leverage as services such as recruitment or those that they leverage in order to improve their own capabilities such as IT service provision);
- Generate reward schemes based on achievement of the metrics that are important to the organisation.
In order to genuinely realise the potential benefits of service-orientation in the short term and – more importantly – prepare for the coming wave of atomisation and capability unbundling, organisations need to find a digestible and sustainable route through the transition process. Such a route needs to be incremental (but holistic), foster decentralisation (but systematic design) and to ensure sustainability through the alignment of metrics, rewards and monetisation strategies. Using capabilities as a logical framework enables much more coherent decisions about organisational specialisation, improvement and delivery, and – equally importantly – generates a pull for the requisite assistance as people struggle to realise their commitments rather than a befuddled ‘huh?’ from people whose metrics encourage them to maintain the status quo.